Exercise 721 Current liabilities LO 71 72 74 710 The followi

Exercise 7-21 Current liabilities LO 7-1, 7-2, 7-4, 7-10 [The following information applies to the questions displayed below.] The following transactions apply to Ozark Sales for 2018: The business was started when the company received $48,500 from the issue of common stock. Purchased equipment inventory of $177,500 on account. Sold equipment for $193,500 cash (not including sales tax). Sales tax of 6 percent is collected when the merchandise is sold. The merchandise had a cost of $118,500. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 3 percent of sales. Paid the sales tax to the state agency on $143,500 of the sales. On September 1, 2018, borrowed $19,500 from the local bank. The note had a 6 percent interest rate and matured on March 1, 2019. Paid $5,900 for warranty repairs during the year. Paid operating expenses of $52,500 for the year. Paid $124,500 of accounts payable. Recorded accrued interest on the note issued in transaction no. 6. Exercise 7-21 Part a Required Record the given transactions in a horizontal statements model like the following one. (Enter any decreases to account balances and cash outflows with a minus sign. \"In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA) and NA for not affected. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.)

Solution

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Assets = Liabilities+ Equity Income Statement Event Cash+ Inventory = Accounts Payable Sales Tax Payable Warranty Payable Interest Payable Note Payable Common Stock+ Retained Earning Revenue- Expense Net Income Cash Flow 1 48500 48500 48500 Financing 2 177500 177500 3 205110 11610 193500 193500 193500 205110 Operating 3 -118500 -118500 118500 -118500 4 5805 -5805 5805 -5805 5 -8610 -8610 -8610 Operating 6 19500 19500 19500 Operating 7 -5900 -5900 -5900 Operating 8 -52500 -52500 52500 -52500 -52500 Operating 9 -124500 -124500 -124500 Operating 10 390 -390 390 -390 Total 81600 59000 53000 3000 -95 390 19500 48500 16305 193500 177195 16305 81600